Johnson,Inc.issued $15,000 in capital stock in exchange for cash.What is the effect of this transaction?
A)Total assets remain unchanged.
B)Cash flow from Financing Activities will increase.
C)Net Income will increase.
D)Total Retained Earnings will increase.

Question

Quizplus · Accepted Answer

Issuing capital stock in exchange for cash is a financing activity, and therefore increases the cash flow from financing activities on the statement of cash flows. It does not affect total assets, net income, or retained earnings.